Decentralization and the post-war political economy

This paper uses cross-national data for 21 OECD nations to examine whether there is evidence of a connection between measures of political and fiscal decentralization and the major, long-term, performance parameters of the post-war political economy. Findings of what is necessarily an exploratory analysis of a wide range of policy outcomes suggest that federalism and the proliferation of constitutional veto-points have inhibited the expansion of the socially protective state and that a low level of fiscal centralization appears to have restrained post-war inflationary pressures and gone along with higher rates of post-war economic growth. No evidence is found to connect either political or fiscal measures with postwar labour market performance.